The group of investors who saved the ship from the scrapyard are sending it to Asia where room demand is higher, although a return on investment is still not expected for another decade.

— Samantha Shankman

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Dubai will spend another $90 million to refurbish the ocean liner QE2 before it steams out of the emirate in October to be moored in Asia as a 400-room luxury hotel, its new owners said on Sunday.

The QE2, launched more than 40 years ago by Britain’s Queen Elizabeth, will be owned by a consortium of investors under a Dubai-based entity called QE2 Shipping, Khamis Juma Buamim, the chairman of the new company said at a press conference.

The identity of the individual investors was not revealed and neither was the final destination of the vessel. But the ship will be moored in Asia and will not return to Dubai.

“We are going to do what we think is right as this is our ship but we won’t scrap it and we won’t destroy it,” Buamim said.

“This is a piece of history. We are going to deliver the project in a timely manner,” he added.

Dubai World’s investment arm Istithmar bought the vessel from Cunard for $100 million back in 2007, but the 2008 debt crunch which left the conglomerate heavily indebted resulted in the vessel being largely left unused.

Hit by the global economic slowdown the emirate scaled back on plans to turn the ocean liner into a luxury hotel at the tip of the emirate’s famous palm-shaped island last year and said she would be moored in an unglamorous part of town instead.

However, in January Dubai announced its decision to move the ship to Asia where it would become a floating hotel.

QE2 will steam out of Dubai on October 18, after which she is expected to reach Singapore on November 1 where she will stay for 3 days before proceeding to Hong Kong for another 3 days and thereafter leave for the selected shipyard in China to complete her transformation, the new owner’s said in a statement.

The ship’s memorabilia will be sent to Singapore and stored in a specially secured warehouse and reassembled after renovation.

No sale

QE2, which undertook its maiden voyage from Southampton to New York City in May 1969, will continue to be owned by Dubai and there are no plans to sell the ship, Buamim said, dismissing media reports that the ship would be sold to Chinese investors.

“We have already spent the money…a large amount was spent on it. Now, it’s a recovery cycle and we expect a ten-year cycle,” said Buamim, adding that he expects the all suite-hotel to turn profitable by 2024.

The profits from the new hotel, expected to be functional in 2014, will be shared among the consortium of investors.

He did not specify where the funds to convert the cruise liner into a hotel are coming from.

The annual maintenance cost of the hotel, which will have 400 suite-size rooms varying in size from 60 to 150 square meters, has been estimated to be around $2.5 million. Some larger suites in the hotel will be for long stay residences.

Buamim said discussions are underway with two to three countries in Asia, which may be QE2’s final destination.

“Whoever gives a better deal, we will give it to them. This should be sometime next year,” said Buamim.

Dubai shipbuilder Drydocks World and Oceanic Group, an Asian cruise company, will be carrying out repairs to enable the voyage to the Far East, Buamin said.

Editing by Dinesh Nair and Elaine Hardcastle.

Copyright (2013) Thomson Reuters.

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